Snowflake $SNOW ( ▲ 1.01% ) is sliding in early trading after its latest outlook raised fresh questions about how profitable its AI push will actually be. The company told investors it expects an adjusted operating margin of roughly 7 percent for the current quarter, below the 8.5 percent analysts were looking for. Snowflake also guided for about $1.2 billion in product revenue.
The frustrating part for shareholders is that Q3 itself was strong. Revenue rose 29 percent year over year to $1.21 billion, beating expectations, and adjusted earnings of $0.35 per share topped forecasts by a wide margin. CEO Sridhar Ramaswamy said Snowflake Intelligence, the company’s new enterprise AI agent, posted the fastest adoption ramp the company has ever seen.
But with the stock already up nearly 70 percent this year, the bar going into earnings was sky high. BNP Paribas analyst Stefan Slowinski said investors were looking for a cleaner beat, especially after other cloud names wobbled on AI concerns.
Snowflake also unveiled a major partnership with Anthropic, signing a $200 million multi-year deal to integrate Claude directly into Snowflake’s data stack for more than 12,600 global customers across Amazon Bedrock, Google Cloud Vertex AI, and Microsoft Azure.